APRIL CONFIDENCE SLIPS A BIT
Byline: Jennifer Owens
WASHINGTON — Consumer confidence dipped a bit in April, but analysts say it still remains relatively strong.
According to the Conference Board’s latest index, released Tuesday, the Consumer Confidence Index stood at 116.8 points in April, down from March’s 118.5, which was 0.4 points lower than February’s seven-year peak. The Conference Board, which surveys 5,000 households each month, called the April decline modest and said it was caused by a dip of nearly five points in the index component measuring current perspectives.
That component, the “Present Situation Index,” dropped to 140 in April from 144.8 in March, the board said. However, the component measuring future expectations advanced marginally to 101.4 in April from 101.1 in March.
“The decline in confidence is not worrisome, with consumers continuing to rate overall economic conditions favorably,” said Lynn Franco, associate director of the Board’s Consumer Research Center. “The Expectations Index, which is a good short-term indicator, is signaling further expansion in the months ahead.”
Confidence concerning the business front was mixed, however. Consumers were more confident in April about current business conditions, with 32 percent saying conditions were good against 30 percent in March. But only 30 percent said jobs were plentiful in April, down from 33 percent in March. Slightly more than 20 percent said jobs were difficult to find in April, up from 18.5 percent in March.
And yet, consumers continue to expect a rosier future. For example, in April, 16.1 percent expected business to improve over the next six months, up slightly from March’s 15.8 percent. And 14.1 percent think the job market will improve over the same period, up from 13.6 percent in March. On the downside, fewer consumers expect their incomes to increase over the next six months, sinking to 21 percent in April from 25.8 percent in March.
Nevertheless, retailers shouldn’t worry yet over the drop in the overall Consumer Confidence Index, said Robert Barr, deputy chief economist at the U.S. Chamber of Commerce. “It is not a drastic one,” he said. “It probably reflects some concern over the stock market and the gyrations there.”
The future, however, may include further declines in the index as consumers react to rising interest rates, Barr said. Most economists expect the Federal Reserve to again raise interest rates at their May 20 meeting. Meanwhile, the current low unemployment rates are expected to rise a bit in coming quarters, he said.
For now, noted Barr, “I would think retailers would want to be vigilant against some retrenching on the part of the consumer.”
Sandra Shaber, an economist with the WEFA Group in Philadelphia, said her prediction for the remaining current quarter includes slower economic growth than during the first three months. “I think consumer spending is showing some signs of weakening as compared to the first quarter,” she said.
Still, she said, “it’s too soon to tell” if April’s decline in consumer confidence will become a big deal. Said Shaber, “Let’s put another month behind us and see what happens.”